Babus as default tycoons

IAS 1

Our style of governance remains “provincial”. Of course nothing wrong in that. The French, despite being the last word in art, films, fashion and style – and now fighter planes – exult in the provincial core of their culture.

The dapper President Sarkozy first became a mayor of a charming French commune – through the simple expedient of marring the Mayors niece – before becoming President of France in 2007. No Indian politician worth his salt would spend a decade in district or municipal affairs, in the hope that this would further his political career.

In politics start at the top and stay there 

No sir, we graduate from student politics directly into the Parliament in Delhi, failing which, to the state level legislatures. Consider, that a Rajasthan dynast of the BJP, now says that he never wanted to be an MLA. But daddy – a BJP big shot from the Vajpayee years, couldn’t get him a ticket for the national elections, so he suffered in a job he was never interested in. He is now open to switch to another party, if he is assured a ticket for 2019.

Ditto that for the civil service

Oddly the government – read politicos – do not consider it strange that it forces bright young appointees to Indian Administrative Service to spend one third of their careers, initially, in the minutia of provincial affairs, “fire fighting” on a daily basis, to manage the perverse outcomes poor public policy, poor delegation, systemic failure or worse, outright corruption. Once their curious minds are suitably dulled and they approach an age, when their cohorts are big names already, in academics, management or technology, they are given a chance to come to Delhi to engage in policy formulation or the State capital to try their hand at program implementation.

It does not help that the existing system for recruitment allows candidates who are approaching middle age to join as a “young” recruit to the IAS. Worse, rather than spending the first decade of their service becoming specialists in their field of choice, these unfortunates become little more than the entitled flotsam of civil administration. They arrive half-baked “by administrative design” to head departments over the heads of existing personnel, who unfortunately were “a few marks short in the UPSC exam”.

Who gains from a plaint civil service?

All this is old hat. The real question is why do such perverse incentives continue to prevail? Who gains from it? Yes, lazy, incompetent IAS officers certainly gain from a system in which having once gamed the UPSC exam, they can sit back, smile at every powerful politician, adopt a tunnel vision on the nature their job, create no ripples and wait for good fortune to promote them faster through more vacancies at the top.

But one doubts that merely making life easy for IAS officers is the real incentive. After all, this elite tribe of around 6000 officers represents just 0.1 per cent (one tenth of one per cent) of the 6 million civilian public servants in administration. The real intent seems to be to keep them captive by never encouraging them to develop marketable talents.

A bureaucrat with “connections” is better than one with options

Professionals with international demand are a dodgy bunch. Remember Raghuram Rajan, Arvind Subramanian or even the Columbia professor, distinctly uncomfortable with real life public policy management – Arvind Panagriya. They found the marginal utility of hanging on, progressively reducing, so they left. A small number of babus also leave to go on to become successful entrepreneurs or professionals abroad or in India.

A bureaucrat with options is the last thing our politicians want. They like the humid stickiness of “relationships” developed over a life time. Such people are dependable. And politicians like bringing their sticky babu relationships along with them, as they grow in importance.

A glimmer of lateral competition at the very end of this government’s tenure

To its credit, the Modi government has, at the end of its five year term, initiated what will eventually become a scaled up lateral infusion of talent. Exposing bureaucrats to competition is the right way to go. But there is also a possibility that this mechanism may remain a subtle threat to ensure slavish, bureaucratic compliance, as is widely prevalent amongst the state level cadres of administrators.

Is it fair to crush bright young minds by stuffing their mouths with faux power

It is unfair that the potential of over 100 young IAS appointees, culled from the 500,000 who take the UPSC exam every year, is systematically degraded. Of course no one forces them to join. But where else can the child of ordinary parents get the chance to become an honoured part of the empowered Indian “elite”?  It is wrong to mould those who join for a three decade long career to become feared, often despised but always subservient members of one political dispensation or the other.

IAS 2

Early specialisation within narrow work verticals can enhance professional pride

Change the system. Cadres should be recruited on a narrow basis of skills and then trained for the public workplace. District administration, for example, is not just an incubation period. It should be a life time occupation. An IAS officer interested in district management should join as a Tahsildar and aim to retire as Chairman of the State Revenue Board. Others, who prefer secretarial services, must have the requisite sector skills (secretariat administration, public finance, industrial and commercial policy, agriculture etc.) join as a Section Officer and hope to retire as Secretary. Cross fertilization between the Union and state government secretariats could work. Most likely, those good at field jobs will be useless in the Secretariat and vice versa. In the modern world “general management” is what a spouse does at home every day. You don’t need to specialise as a generalist from day one.

Stop the contagion spreading through “caretaker” top appointments in private banks

Perhaps the most egregious cases of “provincial” type appointments are visible today in the financial sector. IDBI Bank earlier, Yes Bank and the venerable ICICI Bank are now headed by babus as Chair or Vice Chair. The storied ILFS (Infrastrucure Leasing & Financial Services) – a Non Banking Finance Company, which is, could, if it is not quickly sold to Orix, Japan (an existing minority shareholder with deep pockets), also soon be in “safe” babu hands – possibly one of the many IAS officers who have passed through its hallowed portals on deputation and contributed to its debt overhang.

Babus make excellent choices as a reliable pair of hands. The problem is they also make their organisation “safe” from all risk by bringing to the desk obsessive micro management. It is fine if such “senior age” management is inflicted on publicly owned entities. But why destroy the few private sector entities we have? They are in trouble because of indulgent “independent” directors, including pliant PSU nominee directors, who represented political not public interest and an RBI which failed, till recently, to proactively regulate errant management in privately owned, listed financial companies.

Private tycoons can be regulated, “babu” tycoons capture the regulator

James Crabtree in his breezily readable book – “The Raj Billionaires”, typifies top Indian business heads as “tycoons”- with the freedom to dream big on the back of implicit “relationship” based political support with nary a thought spared for minority shareholders. Simply, replacing a corporate tycoon with a babu hoping that things will become better is like mistakenly opening a fizzy wine and them trying to cap it for a rainy day – it goes flat. There are better ways of regulatory risk management than putting your “own man” in charge – that is an undesirable and inefficient “provincial” option, out of step with good governance practices.

Also available at TOI blogs September 25, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/babus-as-default-tycoons/

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